Student loan kickbacks get kicked back
TEXT OF STORY
MARK AUSTIN THOMAS: Citibank and eight universities have settled an investigation into student loan practices. The New York Attorney General’s office has been exploring conflicts of interest in so-called “preferred lender” programs. But Marketplace’s Amy Scott tells us the investigation is far from over.
AMY SCOTT: Eight universities in New York and Pennsylvania agreed to reimburse students more than $3 million. The schools allegedly accepted kickbacks for steering students toward certain lenders.
One of the lenders, Citibank, will pay $2 million to educate students and parents on the lending business, but that leaves dozens more schools and a handful of lenders around the country still under investigation.
Mark Kantrowitz publishes the financial aid website FinAid.org. He says revenue-sharing deals can benefit students. Many schools use the money toward financial aid.
MARK KANTROWITZ: If it’s properly disclosed to the students and students enter into loans knowing that the school’s going to get some revenue share that’s going to be used for student aid, I don’t see any problem.
A code of conduct adopted in the settlement requires such disclosure. Congress and the Department of Education are also looking into potential abuses.
In New York, I’m Amy Scott for Marketplace.
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